Healthcare Tax Exclusion

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Each tax year, after you retire or exit DROP, as a Retired Public Safety Officer, you may be eligible to exclude up to $3,000 from your annual gross income for health and dental insurance premiums that are deducted directly from your monthly pension payments. Health Insurance Premium Reimbursement participants do not qualified for this tax benefit.

The following is a summary of the rules:

What does the law provide?

The law says that qualified public safety employee retirees may deduct insurance premiums paid from the retirement benefits for health care or long-term care up to $3,000 per year.

Who is a qualified public safety employee?

All retired Los Angeles firefighters and police officers who retired on or after achieving eligibility for normal retirement or who retired on a disability retirement meet the definition. 

Vested members who left prior to being able to retire are not covered. 

If you worked as a police officer or firefighter but retired from the City in a different employment category you are not covered.

Does it cover only my individual premiums or does it apply to family members?

The retiree can use the exclusion for his or her own premium or the premium to cover a spouse or a dependent. A dependent has to be someone for whom you can take a deduction on your tax return. 

Your individual tax advisor or accountant should be consulted on qualification as a dependent.

Is a domestic partner a spouse?

No. A domestic partner is not a spouse. A spouse must be a person to whom you are legally married. 

A domestic partner may be claimed as a dependent if he or she otherwise qualifies as a dependent for tax purposes.

If I am legally married to another retired member of the Fire & Police Pension Plan, do we each get to claim a $3,000 deduction?

Yes, as long as your individual premiums are at least $3,000 per year.

Are there any rules about how the premium is paid?

Yes, the pension plan must pay the premium directly to the provider of the health or long-term coverage. Money paid directly by the retiree does not count. As such, Health Insurance Premium Reimbursement participants are not qualified for this tax benefit.

I heard that I can claim the $3,000 deduction from several plans. Is that true?

No. The total that can be claimed by a retiree for premiums paid for the retiree, spouse and dependents is the actual amount of the premium, up to $3,000 from all sources.

Are qualified surviving spouses and domestic partners eligible to claim the exclusion?

No, the benefit dies with the retired member.

Are all insurance plans covered in this program?

No. The coverage is limited to the plans maintained by the City or the employee organizations.

Questions?

If you have, please contact the Medical and Dental Benefits Section at (213) 279-3115 or toll-free at (844) 88-LAFPP (52377)